Protector Forsikring

Investor Presentation • Feb 12, 2015

Preliminary year-end results 2014 Investor presentation

12 February 2014

Facts about Protector

• A focused Norwegian non-life insurance company
• Established Jan.1, 2004. (Listed Oslo Stock Exchange May 2007)
• Entered the Swedish market in 2011 and Denmark 1 Jan. 2012
• Ownership: Stenshagen Invest, ODIN Norden, Ojada AS, Hansard Europe, Handelsbanken, management/employees etc
• Strong results, average combined ratio 2004 2014, 88.4%
• GWP in 2014: MNOK 2.374
• Solvency capital of MNOK 1.576, investment portfolio ~ NOK 5.0 bn.
• Market cap. 31 December 2014, NOK 3,33 bn.

Outlook 2015:

GWP up 18 % CR 88- 90 %

Dividend policy:

30 – 50% of profit after tax Target solvency margin > 250%

• Vision: "The challenger"
• Main targets:
• Cost and quality leadership
• Profitable growth
• Top three in Protector's defined business segments

¹ Share buy back not included in the volume figures Share price adjusted for dividends Data pr. 03.02.2015

Highlights 2014

Best year ever – Sweden & Denmark in profit

Strong profitable growth

• Volume up 28 % (23%) No. 1 in Nordic market
• Sweden and Denmark 591 mill volume
• Gross cost ratio down to 7.6 % (8.8 %) No. 1 in Nordic market in our segments
• Net combined ratio 84.5 % (86.7 %) Top 3 in Nordic market
• All time high on quality indexes

Strong financial result

• Operating profit of NOK 502.0 mill (430.3 mill)
• Net return on investments NOK 236,8m (5,3%) (256.7 mill 7.0%)
• Return on solvency capital 28 % after tax (28%)

2015 guiding, volume up 18% - Combined Ratio 88-90%

Dividend of NOK 2,00 per share suggested

Gross written premium 2014

GWP up 28%, from NOK 1,860.6m to NOK 2,374.5m

• Change of ownership insurance, 13% growth
• Increased real estate prices and increased no. of policies sold
• Norwegian commercial and public lines of business: 14% growth
• Good renewal rate 95%
• Sweden: 121% growth in GWP
• Representing 9.6 percentage points of the growth on company level
• Denmark: 89% growth
• Representing 6.7 percentage points of the growth on company level

Gross written premium Q4 2010-Q4 2014

Increased diversification and reduced risk

• 2014
• Medium tail significantly reduced as COIs share of GWP is reduced from 36 % in 2008 to 21 % in 2014

• Growth in Sweden and Denmark drives Property and Auto from 18 % of GDP in 2011 to 30 % in 2014

• Gross claims ratio¹ 80.4%, slightly up from 79.9% in 2013

• − Strong development within change of ownership insurance
• − Other illness Norway, behind schedule
• − All other products within the commercial and public lines of business in Norway doing well.
• Net run-off-gains of NOK 91.3 m, 5.1% (61.0 mill in 2013)
• − Run-off-gains on all products within the commercial sector
• − Run-off-gains in future expected (2-4%) since FSA min. requirement are conservative
• Net claims ratio 81.1%, down from 82.5%. Higher claims ratio than peers.

Cost ratio 2014

• Gross cost ratio¹ 7.6 %, down from 8.8%
• Critical mass in Sweden and Denmark reducing cost significantly
• Strengthening of the administration to support the build-up of Swedish and Danish business
• Average no of employees 2014 177, up from 168 in 2013
• Net cost ratio 3.4 %, down from 4.1 %
• Cost ratio will gradually decrease in 2015-17 due to growth in Sweden and Denmark

Highlights 2014 – Norwegian Commercial/public lines

• Volume up 13%
• 7 % growth in commercial sector, 30 % in the public
• Hit-ratio slowing down in the commercial sector
• 3 large and 1 very large wins and 1 large non renewals in the municipality sector
• 5 large wins and 1 large and 2 very large non renewals in the commercial sector
• Personal lines of business , 70 % of total volume
• 8 % growth in 2014
• 24 % growth other lines
• Renewal rate 95 %, on target
• Product mix: Group Life: 28 % WComp: 24% Prop: 14% Other Illness: 10% - Auto 9% - Other 15%
• All time high relationship with leading brokers
• Rated no. 1 eight years in a row
• Single digit growth expected in 2015
• Good start in Q1

GWP 2009 - 2014

Quality leader among insurance brokers eight years in a row

Avg. 58

Protector receives the highest score when brokers are asked to rank insurance companies according to how satisfied they are with their service and offerings

¹ Source: Eiendom Norge 10

Highlights 2014 - Change of ownership insurance

• Volume up 13%
• Market share above 50%, growing slightly
• Increased number of policies sold due to:
  • Distribution channels taking market share
  • High real estate market turnover rate
• Hit-ratio stable on a high level, slightly above 80%
• Real estate prices in 2014 up 2,0% relatively to 2013¹
• Good profitability
• Profitability actions yields results
• Average claims size increasing
• Claims handling organization is tuned toward more complex claims
  • Increases technical expertise
• Very good court results
• Win draw losses: 60% 20% 20%
• Single-digit growth expected 2015
• Strong market at the start of 2015

GWP 2009-2014

ROTECTOR
forsikring

Key facts - Change of ownership

• Conflict level reduced 2004-2014
• Reduced from claims frequency of 22% in 2004 to 14% in 2014
• Real estate brokers have contributed through quality improvements
• Stable, but still high, conflict level in 2014
• Number of claims: 4 513 – Cases brought before the judicial system: 262 – Number of cases in the insurance complaints commission: 336 – Number of employees 54
• År Antall ESF Enebolig 2004 13 095 22 % 2005 43 793 19 % 2006 36 658 18 % 2007 38 699 17 % 2008 35 624 15 % 2009 35 582 15 % 2010 40 995 16 % 2011 45 842 14 % 2012 47 391 14 % 2013 47 179 14 % 2014 52 015 14 % Sum 436 873 Kilde: Protector Forsikring ASA, aktuarrapport

Skadefrekvens

• «Boligsalgsrapport»/technical report used in 71% of villa sales in 2014
• Further increase expected in 2015 real estate brokers key factor in growing market penetration
• Some uncertainty regarding the introduction of a new report

2014 Customer satisfaction – "loved" by the customer

What is the value of COI for you as a real estate broker?

When asked for your opinion on Protector, to what extent will you speak of the company in positive terms?

What is the probabilty of you recommending COI from

To what extent has Protector met your expectations to the

How satisfied are you with Protector as a supplier of COI?

Highlights 2014 – Sweden

• 121% growth
• Representing 9,6 percentage points of the growth on company level
• 2 very large wins and 6 large wins, one large non-renewal
• Break-through in public transport market (buses)
• Number 2 in municipality segment
• Strong renewal rates ~100%
• Net combined ratio 98,5%
• 30 employees, strong organization
• Cost ratio 16.5% down 2.5 percentage points from 2013
• Will continue downward
• Product mix: Auto: 54% Prop: 25% Liability 16% Other 5%
• Leading brokers' quality surveys confirm Protector's strong position in the Swedish market
• Will support double digit growth on company level in 2015

GWP 2011 - 2014

147

69

2011 2012 2013 2014

22

325

Setting new quality standard in Sweden

Protector receives the highest score when brokers are asked to rank insurance companies according to how satisfied they are with their service and offerings

Highlights 2014 – Denmark

• 89% growth
• Representing 7 percentage points of the growth on company level
• 4 large wins and 1 very large win in Denmark
• No large non-renewals
• Strong renewal rate, 110%
• Net combined ratio 96,2%
• 20 employees
• Cost ratio 14.3% down 0.7 percentage points from 2013
• Will continue downward
• Product mix: WComp: 43% Prop: 34% Auto 18% Other 5%
• Relationship with leading brokers continues to develop
• Will support double digit growth on company level in 2015
• Strong news sales 01.01.15

141

37

0

0

50

100

150

200

250

300

2011 2012 2013 2014

266

Front runner on quality in Denmark

Protector receives the highest score when brokers are asked to rank insurance companies according to how satisfied they are with their service and offerings

Results 2014

NOKm	Q4 2014	Q4 2013	FY 2014	FY 2013
Premiums written gross	281,8	237,7	2 374,5	1 860,6	• 28% growth,
Premiums earned gross	593,7	468,4	2 306,8	1 814,6
Claims incurred gross	(451,6)	(362,4)	(1 854,5)	(1 450,6)
Premiums earned for own account	453,4	352,5	1 775,3	1 373,6
Claims incurred for own account	(337,7)	(291,9)	(1 439,5)	(1 133,5)
Operating costs for own account	(37,5)	(36,0)	(60,3)	(56,9)
Other income/costs	(2,0)	(1,8)	(10,2)	(9,5)
Net financial income	13,6	83,9	236,8	256,7
Profit before change in security provision etc.	89,8	106,6	502,0	430,3	• 502m operating profit
Change in security provision etc.	27,0	19,6	* (26,3)	(54,8)
Profit after change in security provision etc.	116,8	126,2	475,7	375,5
Tax	(14,1)	(32,4)	(93,0)	(88,5)
Profit before comprehensive income	102,7	93,8	382,8	287,0
Comprehensive income inc. tax	(14,9)	(1,5)	(24,0)	5,7
Profit for the period	87,8	92,3	358,8	292,6
Gross claims ratio	76,1 %	77,4 %	80,4 %	79,9 %
Gross expense ratio	8,2 %	10,0 %	7,6 %	8,8 %
Gross combined ratio	84,3 %	87,4 %	88,0 %	88,7 %
Net claims ratio	74,5 %	82,8 %	81,1 %	82,5 %
Net expense ratio	8,3 %	10,2 %	3,4 %	4,1 %
Net combined ratio	82,7 %	93,0 %	84,5 %	86,7 %	• Net CR 84,5 %
Retention rate	76,4 %	75,3 %	77,0 %	75,7 %

* Lower security provisons due to reduced uncertainty in Sweden and Denmark.

Return on solvency capital 28%, after tax

NOKm	31.12.2014	31.12.2013
Financial assets	4 957,9	3 999,8
Bank deposits	207,9	153,3
Other assets	786,9	590,9
Total assets	5 952,7	4 744,1
Total equity	991,4	777,2
Subordinated loan capital	148,1	148,1
Total reserves	4 113,3	3 368,8
Other liabilities	699,8	450,0
Total equity and liabilities	5 952,7	4 744,1
Solvency capital	1 575,9	1 335,3
Return on solvency capital, after tax	28 %	28 %
Solvency capital per share, end of period	19,1	16,2
Solvency ratio	85 %	93 %
Solvency margin	296 %	315 %
Capital adequacy ratio (risk weighted)	18 %	20 %
NAV	1 418,1	1 184,6
NAV per share, end of period	17,2	14,3

• Return on solvency capital 28%, after tax
• 24% growth in investment portfolio
• Solvency margin 296%, after eventual dividend
• Historical to date Return on solvency capital after tax 22.4%

Note:

Solvency Capital = shareholder's funds + security provision etc.

Return on solvency capital: Operating profit after tax /average solvency capital

Solvency ratio = solvency capital / NPW

Solvency margin calculated according to regulations from the FSA of Norway.

NAV = total equity pluss 73% of the total security provision etc.

No. of shares = total outstanding shares ex own shares

• 2014 year end investment portfolio of NOK 4.958 m (NOK 3.999m), 24% growth
• Investment philosophy change:
• Gradual build-up of discretionary in-house asset management; increased flexibility to react to changing market conditions
• Diversified investment base gradually implemented
• Significantly decreased exposure to oil and oil services sector
• Increased exposure to US high-yield in Q4 and to European equities after 2014 year end
• Nordic investment grade fixed income portfolio built up on a sound basis

Asset allocation

• Year end 2014; Fixed income 85,8% of portfolio, Nordic equities 14,2%
• Increased allocation to equities in November
• Through discretionary equity portfolio; limited exposure to oil and oilservices sector

Money-weighted allocation of

Money-weighted allocation of investments 31.12.2013

Investment performance 2014

5,3% return on the investment portfolio

• Net investment result of NOK 236,8m, 5,3% return*
• Q4; Net investment result of NOK 13,6m, 0,3% return
• Equities, return of 26,8%, OSEBX 5,0%, OSEFX 5,7%
• Q4; 14,6%, OSEBX -5,5%, OSEFX -3,2%
• Fixed income portfolio, return of 0,8%
• Q4; -1,6%
• Credit spreads increased
• Yield end of 2014; 4,0 %

Return Q4 2014

Portfolio structure and quality bond portfolio

• No currency risk
• Duration 1,34 years (0,57), average maturity is 3,29 years (3,23 years)

Bond portfolio 31 December 2014

Split of fixed income portfolio	NOK mill	%
Bonds	906	22 %
Bond funds	2 848	68 %
Bank deposits	446	11 %
Total	4 200	100 %
Rating including internal rating by Norwegian financial institutions
Investmentgrade	1 152	27 %
BB B	83 117	2 % 3 %
Non rated (funds)	2 848	68 %

Quality bond portfolio 31 December 2014

Development in earnings and key ratios

Net Combined Ratio

Gross cost ratio

Long-term financial objectives

• GWP growth rate: 10%
• Net combined ratio: 90%
• Solvency margin: > 250%
• Return on solvency capital: 20%

Solvency margin

Return on solvency capital after tax

Annual volume growth 2008-2014

(Gross written premium)

	2008	2009	2010	2011	2012	2013	2014	Vol.weighted 2008-2014
PRF	9,6 %	19,5 %	16,1 %	19,0 %	26,1 %	22,7 %	27,6 %	22,0 %
KLP skade*	3,4 %	4,7 %	5,0 %	3,0 %	15,4 %	10,9 %	9,7 %	7,9 %
Gjensidige*	4,4 %	1,3 %	8,3 %	2,9 %	1,7 %	5,3 %	8,6 %	4,6 %
LF*	4,2 %	2,3 %	2,2 %	3,3 %	3,2 %	3,5 %	6,3 %	3,5 %
Codan**	12,8 %	1,7 %	0,3 %	-0,3 %	7,2 %	-1,0 %	-2,3 %	3,0 %
If*	-0,5 %	-3,7 %	8,4 %	5,3 %	5,7 %	2,7 %	-2,2 %	2,5 %
Tryg*	4,4 %	5,2 %	9,1 %	2,4 %	1,8 %	-4,0 %	-5,2 %	2,2 %
Top*	0,8 %	-3,1 %	-1,4 %	1,4 %	1,0 %	1,5 %	2,8 %	0,4 %
Avg. Ex. PF	4,2 %	1,2 %	4,6 %	2,6 %	5,1 %	2,7 %	2,5 %	3,4 %

* 2014 vekst pr. 30.09; ** 2014 vekst pr. 30.06

Protector's growth is organic, while some competitors buys significant portfolios or makes large acquisitions during the period

Gross cost ratio (ex claims handling)

	2008	2009	2010	2011	2012	2013	2014
PRF	11,2 %	12,1 %	11,9 %	10,0 %	7,7 %	8,8 %	7,6%
Tryg*	17,1 %	17,2 %	17,0 %	16,6 %	16,4 %	15,6 %	14,5 %
Gjensidige*	17,0 %	17,7 %	16,5 %	16,4 %	15,5 %	15,3 %	14,9 %
Top*	14,7 %	14,9 %	15,4 %	15,7 %	15,8 %	16,2 %	15,7 %
If*	17,4 %	17,6 %	17,2 %	17,3 %	16,9 %	16,8 %	16,6 %
LF*	21,0 %	22,0 %	22,0 %	21,0 %	21,0 %	19,0 %	18,0 %
KLP skade*	26,7 %	29,1 %	30,4 %	26,5 %	26,4 %	26,2 %	21,8 %
Codan**	20,2 %	20,4 %	19,9 %	21,5 %	22,4 %	22,7 %	23,6 %
Average xPRF	19,2 %	19,8 %	19,8 %	19,3 %	19,2 %	18,8 %	17,9 %

* 2014: pr. 30.09; ** 2014: pr. 30.06

Net Combined ratio

	2008	2009	2010	2011	2012	2013	2014	Vol.weighted 2008-2014
PRF	95,8 %	97,8 %	94,2 %	85,3 %	86,2 %	86,7 %	84,5 %	88,4 %
Top*	82,4 %	91,1 %	93,3 %	90,3 %	88,0 %	91,5 %	86,7 %	89,1 %
If*	91,8 %	92,1 %	92,8 %	92,0 %	89,3 %	88,1 %	87,8 %	90,5 %
Tryg*	88,2 %	92,2 %	98,8 %	93,2 %	88,2 %	87,7 %	84,5 %	90,7 %
Gjensidige*	94,4 %	94,8 %	95,3 %	91,9 %	85,3 %	89,2 %	86,5 %	91,0 %
LF*	93,0 %	96,0 %	102,0 %	100,0 %	98,0 %	97,0 %	94,0 %	97,2 %
Codan**	98,5 %	100,4 %	101,8 %	102,4 %	94,3 %	95,3 %	94,7 %	98,4 %
KLP skade*	97,3 %	95,5 %	121,9 %	118,1 %	107,8 %	103,7 %	97,9 %	105,9 %
Avg.ex.PF	92,2 %	94,6 %	100,8 %	98,3 %	93,0 %	93,2 %	90,3 %	94,7 %

* 2014: pr. 30.09; ** 2014: pr. 30.06

Danish insurers included part of their estimated future invested income (discounted) in their combined ratio. The effect is 3-4% lower CR.

Return on investments

	2008	2009	2010	2011	2012	2013	2014	Avg. 2008- 2014
PRF	-2,1 %	16,1 %	9,7 %	-2,3 %	8,9 %	7,0 %	5,3 %	6,0 %
KLP Skade*	0,4 %	8,3 %	7,2 %	4,5 %	6,5 %	6,5 %	4,6 %	5,5 %
If*	-3,1 %	12,4 %	7,4 %	1,8 %	6,1 %	5,0 %	3,6 %	4,8 %
Tryg*	3,5 %	6,6 %	4,3 %	4,8 %	5,1 %	2,5 %	3,2 %	4,3 %
Gjensidige*	-0,6 %	5,5 %	5,2 %	4,4 %	5,4 %	4,3 %	3,6 %	4,0 %
Codan**	5,6 %	5,9 %	3,5 %	3,0 %	3,9 %	-0,4 %	1,6 %	3,5 %
Top*	-6,9 %	7,3 %	4,8 %	3,1 %	6,9 %	2,8 %	3,3 %	3,0 %
LF*	-14,0 %	10,0 %	6,0 %	-2,0 %	5,0 %	6,1 %	3,7 %	2,1 %
Avg. ex-PF	-2,8 %	8,8 %	5,7 %	2,5 %	5,5 %	4,0 %	3,4 %	3,9 %

* 2014: pr. 30.09; ** 2014: pr. 30.06

Our assesment is that Protector's risk-adjusted return is above average

NORDIC CHAMPION:

Shareholder matters 23 January 2015

Shareholder	No. shares	Percent
STENSHAGEN INVEST AS	6 200 000	7,20 %
ODIN NORDEN	5 531 904	6,42 %
PROTECTOR FORSIKRING ASA	3 570 661	4,14 %
OJADA AS	3 563 116	4,14 %
HANSARD EUROPE LTD	3 221 126	3,74 %
VERDIPAPIRFONDET HANDELSBANKEN	3 100 000	3,60 %
TJONGSFJORD INVEST AS*	2 811 809	3,26 %
AVANZA BANK AB	2 449 044	2,84 %
MP PENSJON PK	2 325 706	2,70 %
JP MORGAN CHASE BANK, NA	2 100 000	2,44 %
ARTEL HOLDING A/S	1 873 451	2,17 %
GABLER RÅDGIVNING AS**	1 702 751	1,98 %
FROGNES AS	1 649 916	1,92 %
VEVLEN GÅRD AS	1 550 000	1,80 %
NORDNET BANK AB	1 520 465	1,76 %
J.P. MORGAN CHASE BANK N.A. LONDON	1 496 234	1,74 %
JOHAN VINJE AS	1 437 841	1,67 %
PETROSERVICE AS	1 343 815	1,56 %
VPF NORDEA NORGE VERDI	1 259 854	1,46 %
VERDIPAPIRFONDET ALFRED BERG NORGE	1 232 137	1,43 %
TOTAL 20 LARGEST	49 939 830	57,96 %
OTHERS	36 215 775	42,04 %
TOTAL SHARES	86 155 605	100,00 %

Related parties shareholding

•	Management's direct and indirect shareholding totals 3.2m shares or 3.7% of current outstanding shares
•	Board members directly and indirectly own a total of 11.5m shares or 13.3%
	of current outstanding shares
•	32 employees own directly a total of 4.9 m shares or 4.1% of current outstanding shares (incl. management)
•	Protector own 3.570.661 own shares or 4.14% of current outstanding shares

No. Shareholders 2.554

* CEO Sverre Bjerkeli

** Chairman of the Board, Jostein Sørvoll

Outlook 2015

Volume up 18 %

• • 50% growth in Sweden/Denmark, single digit in Norway
• • January 1st volume on a strong level
• • Very strong start in Denmark, strong start in Sweden

Gross cost ratio <7.5% (7.7% in 2014)

• • Some volume growth and scalability Norway
• • Critical mass Sweden/Denmark will gradually strenghten

Net Combined ratio 88-90%

• • Profitability measurers claims handling (Commercial and Change of ownership) yielding results
• Rate pressure in commercial and public sector
• Run off gains on a lower level

CEO summary, risk outlook 2015

Slightly decreased risk Sweden & Denmark contribute to diversification

	Risk
+ Volume up in commercial & public sector Norway	Low
+ Sweden and Denmark support double digit growth	No
+ Balance sheet growing leads to increased financial income	No
+ Cost ratio Gross & Net going down	No
+ Price inflation higher than claims inflation in Change of Ownership	Medium
0 Unchanged volume in Change of Ownership sector	Medium
- Rate pressure driving claims ratio upwards	High
- One or two negative surprises will occur	Medium
- Profitability behind guiding in Sweden	Low
- Profitability behind guiding in Denmark	Medium

Outlook 2015

NOKm	Res 2014	Outlook 2015
Premium growth (%)	28	18
Operating profit	502	~500
Investment Income	237	225
Gross cost ratio (%)	7.6	<7.5
Net combined ratio (%)	84.5	88-90
Changes in security provisions (mNOK)	26.3	~100
Return on solvency (%)	28	25
Earnings per share	4.6	~4.8

Return assumptions 2015:
Equity allocation approx. 15%
Return equities: 8% p.a.
Return bonds: 3,6% p.a.
Average invested capital: NOK 5.5b

Strong Q1 2015 expected

Summary 2014

Best year ever – Sweden & Denmark in profit

Strong profitable growth

• Volume up 28 % (23%) No. 1 in Nordic market
• Sweden and Denmark 591 mill volume
• Gross cost ratio down to 7.6 % (8.8 %) No. 1 in Nordic market in our segments
• Net combined ratio 84.5 % (86.7 %) Top 3 in Nordic market
• All time high on quality indexes

Strong financial result

• Operating profit of NOK 502.0 mill (430.3 mill)
• Net return on investments NOK 236,8m (5,3%) (256.7 mill 7.0%)
• Return on solvency capital 28 % after tax (28%)

2015 guiding, volume up 18% - Combined Ratio 88-90%

Dividend of NOK 2,00 per share suggested